Betting on Bezos and Amazon Stock Is a Winning Strategy

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Jeff Bezos’ vision for Amazon (NASDAQ:AMZN) is a grand one, and it’s evident that betting on Bezos and on Amazon stock is a winning strategy.

Why Investors Should Bet on Amazon (AMZN) Stock

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AMZN stock is up 34% so far this year and with another Prime Day upon us, AMZN’s second-quarter results will likely be a catalyst that propels its shares even higher. During last year’s Prime Day, there was a record number of sales, with shoppers purchasing over 100 million products.

This year should do even more impressive than 2018, and the owners of AMZN  stock will be happy to hear that AMZN has a renewed focus on profitability, meaning more of its revenue will flow through to its bottom line.

AMZN Stock Is Heading Toward More Consistent Profitability

In April, Amazon reported its fourth straight quarter of profits, and the market is rewarding Bezos for delivering on his intention to refocus the company on achieving more consistent profitability. Last year, Amazon’s bottom line surpassed $10 billion for the first time, though AMZN stock had a rocky year, largely due to the market’s selloff in December.

This year, Amazon stock has roared back.

One of Amazon’s strategies for Prime Day is charging certain grocery brands more if sales of their promotional products result in a loss. The strategy is part of Amazon’s concerted effort to profit in even low-margin business categories.

In its quest for bottom line protection, Amazon has also been blocking ads for unprofitable products, something AMZN has not done in prior years. With the leverage from Amazon’s widely used platform, the e-commerce giant can force companies to change to more cost-effective packaging and choose not to order from expensive suppliers.

AMZN Reimagines Its Workforce

When seeing a headline that reads, “Amazon plans to spend $700 million to retrain a third of its US workforce in new skills,” many analysts make the mistake of scrolling past it, thinking that it’s not as important to their models as new projects that have more obvious revenue generation potential.

But for the tech industry in particular, human capital is a strategy in its own right.

Raising pay and throwing in a few training classes every quarter just isn’t going to cut it when a company needs everyone to be pushing the envelope to achieve its goals. Amazon, conversely, is spending real money, hundreds of millions of dollars, to ensure that its workers have the skills they need to do their jobs most efficiently.

Programs will help workers “access training to move into highly skilled technical and non- technical roles across the company’s corporate offices, tech hubs, fulfillment centers, retail stores, and transportation network, or pursue career paths outside of Amazon,” the company stated.

Bezos once again is showing that he is continuing to build a company and culture that are unmatched. This corporate training initiative shows how AMZN is building a durable moat.

The Bottom Line on AMZN Stock

Human capital is a real advantage. Amazon’s retraining programming, which focuses on technical skills spanning machine learning, cloud knowledge, and on-the-job apprenticeships will have a far-reaching positive impact on the company and on Amazon stock.

It’s not an easily quantifiable change, and it won’t have an immediate impact on the top line. That said, this aspect of Bezos’ vision, coupled with the company’s razor-like focus on continuing profitability, will help propel AMZN stock toward the $2,500 mark.

As of this writing, Luce Emerson did not hold a position in any of the aforementioned securities.

 

 


Article printed from InvestorPlace Media, https://investorplace.com/2019/07/betting-on-bezos-is-winning-strategy-amzn-stock/.

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